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Saturday, July 23, 2011

Bailing out and proud

A small dispute erupted yesterday between the Netherlands and the European Commission. The point of contention was the actual size of the second Greek bailout.

According to Elsevier, a spokesman for Dutch PM Mark Rutte claimed that the bailout amounts to 109 billion euro, 50 billion euro of which would come from private investors. In stark contrast, the European Commission proudly stated in a communique that the amount was in fact 159 billion euro.

So what's going on here? Seems like a pretty fundamental issue to get wrong.

Rutte's spokesman noted that the difference is due to the fact that the Commission includes the chunk of the first Greek bailout (decided last year) that hasn't yet been disbursed (see more on this here).

But why in the world is the Commission talking up the size of the bailout at a time when the Dutch government (and other governments as well) is having problems selling a second multi-billion euro Greek bailout to its electorates as it is (it's not as if the markets can be tricked to believe that there is extra cash on the table).

The Dutch Parliament had already approved the bailout deal when the Commission came storming in with its clumsy communique, leaving Dutch MPs bewildered and frustrated. The Dutch Greens have now asked for clarification "to the comma" on how much the Netherlands is in fact contributing to the second bailout.

Now, we certainly welcome more debate in national parliaments on this crucial issue. But the people over in the Commission's communication department are either not in the ballgame at all or seriously over-paid.